Schubert Murphy (A Firm) v The Law Society
| Jurisdiction | England & Wales |
| Judge | Mr Justice Mitting |
| Judgment Date | 17 December 2014 |
| Neutral Citation | [2014] EWHC 4561 (QB) |
| Docket Number | Case No: 1HQ/14/0535 |
| Court | Queen's Bench Division |
| Date | 17 December 2014 |
[2014] EWHC 4561 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Justice Mitting
Case No: 1HQ/14/0535
Mr T Dutton QC and Mr R Allen (instructed by Bevan Brittan LLP) appeared on behalf of the Claimant
Mr C Dougherty QC and Mr M Thorne appeared on behalf of the Defendant
Approved Judgment
The claimants were a two-partner firm of solicitors. The defendant is the representative and, as the Solicitors Regulation Authority, the regulatory body, for solicitors in England and Wales, incorporated by Royal Charter.
On 30 April 2010 the claimants were instructed by Nico Kristofi(?) to act for him in the purchase of a registered freehold property, 30 Parkgate Avenue, Hadley Wood, Hertfordshire, for £735,000 from T Dean. The property was subject to a first charge in favour of Lloyds TSB Plc on which £843,000 was in fact outstanding.
Contracts were exchanged on 19 May 2010 and the sale completed on 21 May 2010. "Acorn Solicitors" (principal J Dobbs) acted for the vendor. They gave the usual undertaking to discharge the first charge on completion out of the purchase monies paid by Mr Kristofi. They did not do so. Neither they nor J Dobbs were solicitors. They made off with the purchase monies.
On 9 June 2010 Mr Kristofi was surprised to find notice of eviction served on the occupiers of the property on behalf of Lloyds TSB Plc. I understand that he has not in fact lost his home, but as a result of a settlement, to which I will refer, with the claimants, and of the payment to him of a sum by the collecting bank of the banker's draft used to transfer the purchase monies, he has substantially mitigated, although not entirely avoided, his loss. He sued the claimants. Their insurers settled his claim for £500,000 and costs. By subrogation, the insurers now sue the defendant to recover their outlay.
The circumstances in fact relevant to this claim are as follows:
(i) The defendant has three relevant statutory duties: (1) to keep an electronic list or Roll of all solicitors of the Senior Court (see regulations 2A and B of the Solicitors Keeping of the Roll Regulations 1999); (2) by Section 10.1 of the Solicitors Act 1974 it is responsible for issuing practising certificates to solicitors; (3) by Section 10A of the same Act, it must maintain a Register of such solicitors.
(ii) To permit members of the public and others, including solicitors, to find out who is on the Roll, the defendant maintains a website updated daily of all of those entitled to practice as solicitors which can be accessed through a "page" called "Find a Solicitor". The information thus listed is the same as that on the electronic Roll and Register omitting some details not relevant to this case.
(iii) By paragraph 4.3 of a practice note on mortgage fraud issued on 15 April 2009 to solicitors, the defendant said the following:
"Identify other solicitors or conveyancers. Fraudsters may pose as a solicitor or a conveyancer acting for either party to add greater legitimacy to the transaction. If you do not know them, you should check the recognised directory of their professional Body, the Law Society (then The Law Society's website is identified including the page "Find a Solicitor), the counsel of licensed conveyancers … you can also check a solicitor's details with the SRA over the telephone."
Their contact number is then given. In the glossary in paragraph 1.6 of the practice note "should" is stated to be "good practice for most situations in the Law Society's view".
"If you do not follow this, you should be able to justify to oversight bodies why the alternative approach you have taken is appropriate, either for your practice or in the particular retainer."
Practice Note 4.3 therefore contained strong advice which was nonetheless not mandatory.
(iv) John Clyde Clayman(?) was a 61-year old retired solicitor born on 21 March 1949. By a deed poll made on 23 April 2009 signed by "John Dobbs", but not by Mr Clayman in his original name, he apparently changed his name to John Dobbs. The latter signature was witnessed by two witnesses. One of the signatures of the witnesses was placed next to the stamp of a firm of solicitors, and the signatory appears to be one of the partners in that firm. A copy of the deed poll was provided in support of an application to amend the name of John Clayman on SRA records. On 18 May 2009 "John Dobbs" applied to the SRA for a practising certificate. The application form stated that he was admitted on 1 August 2006. He described himself as a locum solicitor. On 30 September 2009 "John Dobbs" applied to the SRA for approval to practice as a recognised sole practitioner under the name "Acorn Solicitors" from an office in Rotherham. Both applications were accepted and his name and that of Acorn Solicitors were entered on the Roll and on the "Find a Solicitor" page of the defendant's website.
(v) On 10 May 2010, Mrs Murphy, one of the claimants' two partners, carried out a search of the "Find a Solicitor" website page which confirmed the existence of Acorn Solicitors and that its principal was John Dobbs.
(vi) In reliance on that information, the claimants accepted the worthless undertaking of "Acorn Solicitors" to discharge the debt owed to Lloyds TSB Plc out of the purchase monies, to their clients', and ultimately as a result of the claim brought by him, their and their insurer's loss.
(vii) In (1) placing the name of John Dobbs on the Roll and issuing a practising certificate to him and (2) representing to the claimants and through them to Mr Kristofi that John Dobbs was a qualified solicitor entitled to practice as such under the name "Acorn Solicitors" the defendant acted for the purpose of this application carelessly. The claimants' case is that they acted negligently, in other words not only carelessly, but in breach of a duty of care owed to either or both of the claimants and Mr Kirstofi.
(viii) The alleged negligence of the defendant has caused the claimants and/or Mr Kristofi loss which the claimants are entitled to recover either on their own behalf or under the Civil Liability Contribution Act 1978 from the defendant. The defendant raises numerous defences, some of which depend on facts which can only be found at trial. By an application notice dated 15 August 2014, the defendant applies to strike out the whole of the claimant's statement of case on the basis that it discloses no reasonable grounds for bringing the claim and/or for summary judgment on the basis that it has no reasonable prospect of success. As in other cases, I treat those two tests as effectively synonymous. The basis of both applications is that the defendant owed no duty of care to the claimants or to Mr Kirstofi. The claimant's case is that a duty of care not to cause economic loss to them or to Mr Kristofi arose in one or more of three ways: (1) by assumption of responsibility; (2) by application of the three part test in Caparo Industries Plc v Dickman [1992] AC 605; (3) either within or by way of a modest increment on established case law relating to negligent misstatement of the Hedley Byrne & Co Ltd v Heller & Partners [1964] AC 465 variety.
The defendant's contention that no duty of care arises is based on the performance by the defendant of its statutory duty as regulator. Mr Dutton QC for the defendant submits that a body in the position of the defendant exercising that statutory function, either as a matter of principle or generally, owes no duty of care to those who may be injured economically by carelessness on his part in the performance of its duties. The bedrock of his submission is the decision of the Privy Council in Yuen Kun-Yeu v Attorney General of Hong Kong [1988] 1 AC 175.
The facts were that the plaintiffs had deposited money in a deposit taking company registered by the defendant, the Commissioner for Deposit-Taking Companies under a Hong Kong Ordinance. The plaintiffs alleged that the defendant knew or ought to have known that the affairs of the company which took the...
To continue reading
Request your trial
-
Schubert Murphy (A Firm) v Law Society of England and Wales
...[2017] EWCA Civ 1295 IN THE COURT OF APPEAL (CIVIL DIVISION) ON APPEAL FROM HIGH COURT, QUEENS BENCH DIVISION MR JUSTICE MITTING [2014] EWHC 4561 (QB) Royal Courts of Justice Strand, London, WC2A 2LL Before: The Master of the Rolls Lady Justice Gloster, VICE PRESIDENT, CIVIL DIVISION and Lo......